Effective from 3 November, credit card issuers can charge a maximum 2% per month on unpaid outstanding credit card balances.
The BSP (Bangko Sentral ng Pilipinas) will impose a new 24 percent cap on interest rates credit card issuers can charge borrowers, effective from 3 November.
“The interest rate cap on credit card receivables aims to ease the financial burden of consumers and micro, small and medium enterprises amid a difficult economic environment caused by the Covid-19 pandemic,” BSP governor Benjamin Diokno said in a statement.
Currently, credit card users in the Philippines pay anywhere from 18 percent to 54 percent in finance charges, according to a central bank study.
Under the changes, credit card issuers can only charge up to 2 percent a month on unpaid outstanding credit card balances.
The new policy also imposes a separate interest rate cap for credit card installment loans, allowing for only a maximum monthly add-on rate up to 1 percent.
Credit card issuers are also prohibited from charging additional fees on credit card cash advances, except for a maximum processing fee of PHP 200 per transaction.
The BSP’s circular on the changes, which will be reviewed every six months, is available here.
Responding to the changes, BAP (Bankers Association of the Philippines) managing director Benjamin Castillo said member banks recognise the importance of the reforms.
“We support this initiative. This will help ease the burden of every household including businesses severely affected by the pandemic,” he said.